Category: Energy and Environment

Comprehensive energy approach vital to NM future

Post author By Paul Gessing
Post date September 22, 2021

The following was written by RGF Board member Steve Dodson. It appeared in the Albuquerque Journal on September 19, 2021.

New Mexico lawmakers must put politics to the side and embrace an all-of-the-above approach to sustainable energy if our state is to recover from the pandemic and advance our shared goal of combatting climate change.

A federal judge recently ruled in an ongoing lawsuit that the Biden administration must, for now, rescind its pause on oil and gas leasing on federal lands after more than a dozen states sued, citing that they had met the threshold for proving that the ban would result in significant community harm and economic loss. This comes on the heels of former New Mexico congresswoman and current Secretary of the Interior Deb Haaland’s testimony before the House Natural Resources Committee where she made clear there is no “plan right now” to enact a permanent ban on oil and gas leasing on federal lands.

This is all welcome news for New Mexicans and speaks to the need for honest conversations around the role oil and gas must continue to play in New Mexico’s future.

Our state has long been reliant upon the jobs and funding provided by oil and gas operations for critical public outlays like education, health care and infrastructure. Federal lands currently compose nearly 35% of our state’s total area – a permanent leasing ban would immediately threaten the welfare and future of our state while offering no direct alternatives to replace lost public funding and jobs.

Serving on the board of the Rio Grande Foundation, I am proud to work toward bringing meaningful reform to New Mexico. After one of the most devastating periods in history, marked by financial hardship and tremendous loss, it is vital – now more than ever – that energy policy decisions are balanced and take into consideration the vital economic benefits the industry provides to New Mexicans in every corner of the state.

The tax revenues derived from oil and gas operations are essential to N.M.’s economy, bankrolling schools, hospitals, roads and other infrastructure without hurting the pockets of N.M.’s taxpayers. The state’s Land Grant Permanent Fund, also known as the Permanent School Fund, is financed directly by oil and gas operations and is one of the largest such funds in the United States. It annually provides over three-quarters of a billion dollars to New Mexico’s public schools, universities and other related beneficiaries – in 2021 it is estimated the fund will produce roughly $836.5 million in benefits.

Furthermore, New Mexico’s … unemployment rate of 7.9% is tied for the highest in the entire country according to the Bureau of Labor Statistics. The oil and gas industry supports 134,000 jobs and contributes over $16 billion to our state’s economy annually. If this leasing ban were ever to be made permanent, it could result in (the loss of) over 60,000 jobs and nearly $1.1 billion in public funding.

Finally, the oil and gas industry is crucial to our national energy transition and continuing to meet consumer demand without increasing energy prices. Instead of focusing on demonizing oil and gas producers, our officials should be working hand in hand with them to incentivize innovative solutions like Carbon Capture and Storage (CCS) that can reduce carbon emissions without destroying jobs and revenues.

Although the recent court ruling and Haaland’s comments suggest the current leasing pause will come to an end, nothing is for certain. As some of our state’s lawmakers continue to try to appeal to partisan groups in Washington rather than their own constituents, it is important for all of us to remind them a balanced approach is necessary for New Mexico’s energy and economic future.

The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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Oil and gas both a blessing and curse for New Mexico

Post author By Paul Gessing
Post date September 17, 2021

The following appeared on Sep. 16, 2021 at KRWG.

The news that New Mexico’s oil and gas industry has again generated record-breaking revenues for the State was welcomed by policymakers and interest groups alike. But the disconnect between the State budget picture and the economic situation for average New Mexicans could not be starker. And this is one of the “problems” associated with the state’s dependence on oil and gas.

Don’t get me wrong: we at the Rio Grande Foundation fully support the oil and gas industries. The so-called “progressive” Democrats in the Legislature who signed a letter to the Biden Administration earlier this year in support of the Administration’s illegal moratorium on new permits on federal lands definitely believe oil is a curse. We believe that New Mexicans are the recipients of a fabulous gift and that there is no reason for us to be among the poorest states in the nation as is currently the case.

New Mexico is “cursed” by bad politicians, not by its bountiful resources. But those resources all too often prop up bad decisions made by our political leaders. Until voters hold them accountable, New Mexico, blessed as it is by nature, will continue to founder.

Our poverty contrasts with our resource wealth in the same way as the new revenue picture contrasts with the state’s outsized unemployment rate. At 7.6 percent, New Mexico has the 2nd-highest jobless rate in the nation. It is not entirely surprising that our workforce participation rate which measures the percentage of people actually engaged in gainful work, also lags badly.

New Mexico’s poverty rate is high (3rd-worst in the nation) and according to the US Census Bureau the state badly lagged its region in population growth over the past decade. We were named the number one “economically-failing” state another recent report and the “progressive” Voices for Children’s own report ranks us a dismal 49th.

It’s not a lack of money or government spending. Government in New Mexico is already bigger than it is in our neighboring states by quite a bit and our faster-growing neighbors spend much of their money on state/local government than we do. It is anathema to New Mexico’s “progressives,” but it is time to return a healthy chunk of this surplus to the private sector.

The low-hanging fruit and an absolute “must” for the 2022 legislative session is reform of our state’s onerous, business-killing, and regressive Gross Receipts Tax (GRT). This regressive tax directly and unnecessarily impedes the growth of small businesses in our state. Reforming the GRT to eliminate taxes on business inputs is a must this session. It can be done with relatively minimal revenue reductions, but, reducing high GRT rates would be a welcome move.

Social security tax reform has also been discussed in recent years. The tax brings in approximately $85 million annually. Eliminating it would make New Mexico a more attractive destination for retirees.

Finally, while it is a bit of a stretch for such a left-leaning body, New Mexico could do a lot to make itself more attractive as a business destination by simply doing away with its corporate income tax. The tax generates about $130 million annually or about 1/10th of next year’s surplus. This is eminently “do-able” and when combined with long-overdue GRT reform would go a long way to getting New Mexico’s economy moving again.

New Mexico’s Democrat-controlled legislature has a once-in-a-generation opportunity to use this windfall to diversify New Mexico’s economy. If they fail, voters must hold them accountable.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

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Paul Gessing discusses the latest news and challenges facing our State on New Mexico Rising Podcast

Post author By Paul Gessing
Post date August 4, 2021

Paul had a fun conversation with the guys at the New Mexico Rising podcast. You can find the conversation below on Youtube as well as audio versions of this and other podcast episodes here.

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Heinrich coming for your gas heater, stove

Post author By Paul Gessing
Post date July 21, 2021

The following appeared in the Albuquerque Journal on July 21, 2021. While the newspaper cannot include hyperlinks to the data used in the piece we have added those links here:

Natural gas is a clean and affordable fuel they use to cook, heat their water, and provide warmth in the winter. Millions of Americans appreciate its benefits, even if they don’t think about them.

Just because you don’t think about natural gas doesn’t mean radical environmentalists (including New Mexico’s senior US Senator Martin Heinrich) aren’t. Heinrich recently wrote in the New York Times that “working to electrify our vehicles, homes and businesses is a critical part of achieving economywide net-zero emissions.”

He’s pushing legislation in Congress and for funding in the “infrastructure” bill for “electrification” – which is really another way of saying phasing out or banning your natural gas stove, oven, and furnace and requiring you to use electric heat and stoves.

Sacramento recently became the 46^th US city to begin “phasing out natural gas in new buildings.” It’s not just happening in California. According to the Wall Street Journal, “Seattle, Denver and New York have all either enacted or proposed measures to ban or discourage the use of the fossil fuel in new homes and buildings.”

Just a decade or so ago the Sierra Club and other environmental groups supported natural gas as a cleaner-burning alternative to coal. Now, Senator Heinrich – counter to the economic interests of the state he represents (New Mexico is a major natural gas producer) and against the expressed preferences of consumers who use such appliances – is pushing to eliminate natural gas.

The push for a natural gas ban is premised on the idea that we should replace fossil fuels with wind and solar technologies that put us on a path to “net-zero emissions.” Of course, we’re not just talking about replacing all existing electricity generation; just 10% of current electricity production comes from wind, solar, and geothermal combined. Experts say “electrification” would increase US electricity consumption by 40 percent.

To say the least, Sen. Heinrich’s “electrification” scheme will require astonishing amounts of new electricity generation (at great economic cost) not to mention batteries to ensure reliability and new transmission lines to distribute it. We’ll be the ones paying for all that new redundant generation.

It’s an even bigger problem considering the reliability and demand issues already facing the Western United States this summer and utilities’ (including PNM’s) difficulty bringing new “renewables” online.

And then there are consumer preferences for natural gas, which for some reason get casually ignored. You will have to search far and wide to find an electric stove in your favorite restaurant. That’s because natural gas is superior to electricity for cooking on both food quality and price. Banning natural gas in restaurants means you would be waiting longer for your favorite meal while also paying more.

Any serious push for “electrification” of our economy will require massive government subsidies (thus Heinrich’s push in the current “infrastructure” bill), with electricity reliability already an issue the reliability of natural gas can be a literal lifesaver.

We all want clean, affordable, and reliable energy. Natural gas provides all three. And while the US has been steadily-reducing CO2 emissions for over a decade, China now emits more CO2 than the rest of the developed world combined(that includes the US, Canada, Europe, and Australia). Sen. Heinrich’s forced-shift to all-electric in the US will be costly and won’t achieve the environmental gains he seeks.

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Biden Energy Policy: How Red States Saved New Mexico

Post author By Paul Gessing
Post date July 9, 2021

The following appeared on July 9, 2021 at National Review’s Capital Matters:

On June 15, 2021, U.S. District Court Judge Terry Doughty issued a preliminary injunction halting the Biden administration’s moratorium on new oil and gas permits on federal lands and in federally controlled offshore areas in the Gulf of Mexico. The lawsuit was filed by 14 states that were set to lose out on significant oil and gas development if the moratorium remained in place indefinitely.

Ironically, of all the states impacted by Biden’s moratorium, increasingly deep blue New Mexico had the most to lose. According to an analysis from the American Petroleum Institute, New Mexico would be expected to lose over 62,000 jobs and $1.1 billion in revenue from the moratorium. Ranking third among all states in oil production and a leader in natural-gas production as well, New Mexico would have lost nearly half of total production in both had the moratorium stuck.

Wyoming, the next-most-affected state would have lost just a bit over half as much revenue ($641 million) as New Mexico. And, with an annual General Fund budget of $7.4 billion, that is a lot of revenue to make up. Unfortunately, in this world of “red” and “blue” states, self-interest was not enough to get New Mexico Attorney General Hector Balderas to join the lawsuit.

So, no thanks to any of our own elected officials (or former New Mexico Congresswoman, now Interior Secretary, Deb Haaland), New Mexico likely just dodged a dagger aimed straight at the heart of the state’s economy. Better still, a combination of market forces and geological discoveries means that New Mexico’s oil and gas industries (like America’s) could be heading into an era of unprecedented prosperity, if the political forces arrayed against them can be held at bay.

Prior to the COVID-19 pandemic, oil production in New Mexico’s Permian Basin (which it shares with Texas) had been growing rapidly. As recently as 2010 New Mexico was the 7th-leading oil-producing state in the nation with 65 million barrels a year. By 2020 (despite the pandemic), annual production had risen to 379 million barrels.

Now, it appears that New Mexico is on the verge of surpassing North Dakota to become the nation’s 2nd-largest crude-oil producer. March 2021 data (the most recently available) from the Energy Information Administration (EIA) show New Mexico producing 1.16 million barrels of oil per day compared to 1.11 million in North Dakota.

Like most of New Mexico’s post-2010 surge, the state’s continued growth is being driven by new discoveries that are accessible through new technologies; notably, “fracking.” Furthermore, as the Permian Basin has already been producing large quantities of oil and natural gas for decades, the infrastructure to access and move the product is already in place.

As if all of these convergent factors acting in support of New Mexico’s oil and gas industry weren’t enough, while motorists may not be thrilled, prices at the pump clearly show that the industry is doing quite well in the wake of COVID-19. If analysts from Bank of America are right, the boom is just getting started. They predict that by 2022 crude-oil prices could hit $100 per barrel. This means even more jobs and tax revenues flowing into New Mexico and it means reliable (if not necessarily cheap) energy for Americans.

Ironically, despite all of this good economic news for the state, New Mexico’s history of rule by left-wing Democrats has left it in pretty bad shape, thanks in no small part to the intense lockdowns during the pandemic. Oil and gas and the money it brings may help, but if the state’s political leadership doesn’t do a better job managing the boom, the next bust could be harder to manage.

According to the Bureau of Labor Statistics data for May, New Mexico’s unemployment rate is 2nd-highest in the nation at 8 percent. Worse, due to the state’s poor performance on a variety of education, economic, and crime rankings, New Mexico was recently ranked as the worst state in the U.S. in which to live. Agree with the data or not, the Land of Enchantment has some deep-seated and serious issues to deal with.

And, while most problems are made easier with money as opposed to without it, a system where politicians have plenty of resources to spend regardless of the success or failure of their economic policies is not a great system. In fact, it is a system that has fueled awful government in places like Saudi Arabia and Venezuela (to name just two poorly governed petro-states).

Will things be different this time for poor New Mexico? The political and economic situation are extremely volatile and it is hard to tell. With energy largesse flowing in, the Land of Enchantment could finally add a strong economy to its name. Political will has always been the missing ingredient.

PAUL GESSING is president of New Mexico’s Rio Grande Foundation.

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New Mexico Special Election Could Further Reduce Pelosi’s House Majority

Post author By Paul Gessing
Post date May 5, 2021

The following appeared at National Review on May 4, 2021.

Nancy Pelosi’s majority in the House of Representatives continues to shrink. The recent swearing-in of Republican Julia Letlow of Louisiana has taken the House Democrats’ majority down to 218–212. This means that Pelosi has a mere two-vote governing majority with which to push the Biden administration’s big-government agenda.

The GOP will soon have another chance to reduce Pelosi’s margin for error when voters in New Mexico’s first congressional district (which includes Albuquerque and its environs) go to the polls to elect a replacement for Biden’s newly minted secretary of the Interior, Deb Haaland, a Democrat. Early voting begins today, while Election Day itself is June 1.

The district is classified by many in the national media as a “blue” district that should safely remain in Democratic hands, and as recently as November 2020, Haaland defeated Republican challenger Michelle Garcia Holmes by an overwhelming 58–42 percent margin. The seat was previously held by New Mexico’s current Democratic governor Michelle Lujan Grisham, and before that, now–senator Martin Heinrich, also a Democrat.

But Republicans have faced challenges in candidate recruitment in recent years in this congressional district. The last time they had a truly top-notch challenger was in 2010, when Jon Barela lost just 52–48 to Martin Heinrich, and in 2009 Heather Wilson, a Republican, held the seat, having done so for a decade. With this race being the sole topic of a special election and so much at stake in Washington, this could be a much more interesting contest than outsiders expect.

The candidates to replace Haaland could not be more different. While there is a serious independent contender and the Libertarians technically have major-party status, the Republican and Democrat contenders are state legislators with long histories of voting on important policy issues. Republican senator Mark Moores has been in the New Mexico Senate since 2013. In addition to his prior experience as a staffer for various Republican officeholders Moores played offensive line for the University of New Mexico Lobos.

Melanie Stansbury, on the other hand, was unknown in the state until she ran for the New Mexico house in 2018. Her prior political experience was in the Obama administration’s Office of Management and Budget.

The legislative track records of these two candidates are also drastically different. For starters, Stansbury strongly believes that New Mexicans should have their tax burdens increased rather dramatically.

In 2019, she voted for HB 6, which subsequently became law. Among other provisions, the bill increased taxes on auto sales, imposed taxes on Internet purchases, and increased New Mexico’s personal income tax. Ironically, this tax hike took New Mexico’s top personal income-tax rate from 4.9 percent (set by former Democratic governor Bill Richardson and the Democrat-controlled legislature) and brought it up to 5.9 percent. Moores voted against the tax hike, but it was subsequently signed into law by Governor Lujan Grisham, despite the state having a surplus in excess of $1 billion at the time.

In their most recent legislative session, the New Mexico legislature was back to raising taxes, and Stansbury was more than happy to go along. Despite the COVID-19 pandemic and a state unemployment rate that remains among the worst in the nation, the combined forces of New Mexico’s resurgent oil and gas industry and the massive economic stimuli out of Washington again put the New Mexico budget comfortably in surplus territory.

Nonetheless, Stansbury and other Democrats in New Mexico’s legislature voted for and passed numerous tax hikes. HB 122, which failed after House approval, was subsequently folded into SB 317 and ultimately signed into law. Stansbury voted for the bills both times. The bills increase a tax imposed by the state on health-insurance premiums from 1 percent to 3.75 percent — a tax increase of 275 percent. Moores voted against the tax hike.

As if that were not enough to illustrate the stark difference between these candidates, Stansbury joined her Democratic colleagues in the New Mexico House to push even more egregious tax legislation in the form of HB 291. This bill which passed the House with Stansbury’s support would have again increased New Mexico’s personal income tax, this time to 6.5 percent, but (more problematically) would have revised the state’s personal income-tax structure to make the higher tax rates kick in at much lower income levels than under current law.

On top of this, the proposal Stansbury endorsed would have allowed property-tax assessments to increase by up to 10 percent annually if the property was not occupied by the owner. The current cap in New Mexico limits annual increases to the already-substantial rate of 3 percent per year. The measure was intended to target Texans with second homes in New Mexico, but it would have applied to apartment and condo dwellers as well.

Fortunately for New Mexicans, cooler heads prevailed in the (also Democrat-controlled) Senate Finance Committee, which eliminated the tax hikes from HB 291 before the bill passed into law.

These are just the tax hikes endorsed by Stansbury in her three short years in the New Mexico legislature. During her time in office, she has voted to ban local governments from enacting “Right to Work” laws on the local level, and she voted for New Mexico to abandon the Electoral College, saying instead that it should dedicate its five electoral votes to whatever candidate won the popular vote. The latter would have dramatically diminished what influence small-population New Mexico has in presidential races for no benefit aside from her ideology.

Stansbury is a true big-government radical. Her advocacy of big government in the New Mexico legislature places her to the left of Nancy Pelosi. At a time when every race matters in a closely divided U.S. House, conservatives cannot ignore this special election in a “blue” but winnable district.

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City of Las Cruces should reject bag ban

Post author By Paul Gessing
Post date April 26, 2021

The following appeared in the Las Cruces Sun News on Sunday, April 25, 2021

The City Council of Las Cruces is considering a ban on plastic bags, specifically those bags which are thinner than 2.25 millimeters thick. Restaurants may or may not be exempted from the statute, but banning plastic bags is not a viable solution to our solid waste challenges.

In fact, nearly all cities around the country and State of New Mexico including Albuquerque put their bag bans on hold for the duration of the COVID 19 pandemic. Albuquerque’s ban remains in place with no return date set.

Furthermore, while curbing the use of thin bags may seem like a reasonable policy, stores simply replace thin bags with thicker plastic bags as was done in Albuquerque. That shift led Albuquerque City councilor Pat Davis to say that he wanted to amend the City’s bag ban to also get rid of plastic bags that are thicker than 2.25 thousandths of an inch. The thicker bags were exempted from the law for the simple reason they are considered “reusable,” but Davis called the provision a “loophole.”

This discussion was going on in early March of 2020 which thankfully means it was never adopted. And, while the Centers for Disease Control has said that surface transmission of COVID 19 is extremely rare, that does not mean that banning plastic bags is a good thing for public health.

A 2018 report from Loma Linda University used data from an experiment in which researchers purposely “contaminated” a reusable bag with a harmless form of a virus. A single shopper then went through a typical grocery store, and the research team tracked the spread of the virus.

Quoting directly from the executive summary of the report, “The data show that MS2 (virus) spread to all surfaces touched by the shopper; the highest concentration occurred on the shopper’s hands, the checkout stand, and the clerk’s hands.”

Additionally in 2012 epidemiologists from the Oregon Public Health Division and Oregon Health & Science University published a peer reviewed article in the Journal of Infections Disease that documented a reusable grocery bag was the point source in an actual virus outbreak in the Pacific Northwest.

For years, people have simply believed that people will wash their bags. But Loma Linda researchers found only 3% of bags get washed. That rate may be better post-COVID than it was before, but there is also a diminished environmental benefit to reusable bags – especially in our desert environment – if they have to be washed regularly.

Instead of the City of Las Cruces micromanaging consumers’ use of plastic bags, I recommend that residents concerned with plastic pollution recycle or reuse their plastic bags instead. Plastic bag recycling programs with bins outside of local big box stores seem to have been one of the many casualties of the pandemic. Hopefully these programs return soon.

Until then, the bags make great trash can liners and can be used to pick up pet waste. I take along a bag or two on my walks and use them to clean up the neighborhood by picking up trash or aluminum cans along the way.

This final point really highlights the need for individual responsibility. Plastic bags are what you make of them. Government mandates can’t make us “green,” rather it is our responsibility to be good stewards of the environment around us. There will always be “loopholes” in laws such as the thickness of the plastic bags handed out at stores. For good reasons restaurants also need plastic bags and other utensils.

If you don’t want or need a bag, you are the customer and can refuse them or bring your own reusable bags. Don’t force your views on those of us who are responsible and repurpose these bags for useful, even “green” purposes.

The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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Democrats walk fine line on energy

Post author By Paul Gessing
Post date April 19, 2021

The following appeared in the Albuquerque Journal on April 18, Santa Fe New Mexican, and other New Mexico media outlets.

If there were an overall theme for New Mexico’s current political situation it would be the ongoing attempts by Democrats to placate their environmentalist base which opposes traditional energy sources while at the same time keeping energy dollars flowing into the State’s coffers.

The Biden Administration’s moratorium on oil and gas permitting is the most notable example of this conflict. Gov. Lujan Grisham has publicly spoken out about it, but Attorney General Balderas has refused to join a lawsuit challenging the policy that was recently filed by a dozen states. None of those states have as much to lose as does New Mexico, but our elected leaders are unlikely to challenge a President of their own party.

The internal conflict was on full display in the recently-completed legislative session as well. Thankfully, the most radical bill on energy which would have banned “fracking,” (an oil and gas drilling process without which New Mexico’s oil and gas industry would be immediately decimated) failed without gaining traction.

Making it much further in the process only to fail unexpectedly was Sen. Mimi Stewart’s “clean fuel standard” SB 11. In 2019 Gov. Lujan Grisham made national headlines stating that New Mexico was going to increase vehicle mileage in New Mexico to 52 MPG by model year 2022.

SB 11 would have instead forced motorists to use “alternative” fuels with the goal of reducing carbon emissions while passing off the hard work of actually developing the technology onto the private sector. Presumably blame for higher fuel costs would have been shifted as well. The bill faltered after passing the Senate.

Anti-energy bills that did make their way into law included SB 8 which allows local governments to enact more restrictive air quality regulations than are imposed by the federal government. It is unlikely that conservative counties where much of the Industry is located (and people are far more supportive of the Industry than liberal Albuquerque or Santa Fe) will enact such regulations, but this is about politics, not policy.

Speaking of politics, SB 112 which also made its way into law creates a “sustainable economy task force.” The task force’s stated goal is “diversifying New Mexico’s economy while reducing reliance on traditional energy sources.” Of course, New Mexico Democrats have controlled the Legislature for decades and with total Democrat control under Lujan Grisham, they have had ample time to enact the public policies necessary to “diversify” New Mexico’s economy.

Unfortunately, Santa Fe has repeatedly failed to reform the gross receipts tax, eliminate Social Security taxes, reduce onerous regulations, and expand educational choice (to improve workforce preparedness). In recent legislative sessions we’ve instead seen tax hikes passed at times of big budget surpluses. During both the 2019 (HB 6) and 2021 (SB 317) sessions tax hikes were adopted. Such cash grabs do nothing to diversify New Mexico’s economy. At best they diversify government revenues. In addition to tax hikes, policies like minimum wage hikes, paid sick leave mandates, and ongoing COVID restrictions imposed by the Executive only hinder economic growth and diversification.

Finally, this session, while the Legislature continued its piecemeal attacks on energy, after a decade of attempts they passed an amendment to increase distributions from the Land Grand Permanent Fund (the fund is generated by oil and gas). HJR 1 not only increased distributions by 1% but added an additional .25% to that amount for a total increase of 1.25%.

Continued existence of the fund happens only if the oil and gas industry thrives, so Democrats’ plan to take more money out while less money is put in seem problematic at best.

Rather than killing off energy first, New Mexico’s elected leaders should focus on diversifying the economy. When we are no longer among the very poorest states in the nation the Legislature can address ways to make the New Mexico less dependent on oil and gas.

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New Mexico session another missed opportunity

Post author By Paul Gessing
Post date March 29, 2021

The following appeared in the Las Cruces Sun News on Sunday, March 28, 2021. UPDATE: Originally the article stated there was a production moratorium on federal lands. There is “only” a moratorium on new permits.

New Mexico is in one of the most unusual economic times in its history. Profound forces have impacted our State over the last year in unforeseen ways.

- The Gov. and COVID shut down much of our State for much of the past year. COVID is declining, but New Mexico remains among the most locked-down states in the nation;
- Oil and gas prices plummeted last April due to the pandemic and an international price war, but have come roaring back and produced $300 million in “new” money and a budget surplus;
- Democrats in Washington recently passed a $1.9 trillion dollar “stimulus” that will dump an astounding $9 billion on New Mexico State and local governments. Meanwhile the Administration’s moratorium on oil and gas permits on federal lands will cost our State more than $700 million over the next few years according to Gov. Lujan Grisham;
- While New Mexico governments are awash in money, businesses are struggling to recover. The State’s unemployment rate is 8.7 percent, 4^th-worst in the nation.

To say we are living through unpredictable times would be an understatement. Oil and gas have always been volatile but are now more unpredictable than ever. This reflects broader economic uncertainty, but with the Biden Administration targeting the Industry, the Legislature must diversify our economy (this does not mean simply new sources of government revenue).

The unprecedented stream of federal spending flowing into our state is currently augmented by a flow of people. Housing markets are tight in most of our cities as Americans from big, expensive, states like California embrace remote work or simply move to states like New Mexico where they can spread out and buy a house for a lot less money.

Current trends are favorable, but long-term economic prosperity requires enacting policies that make the State more attractive as a business destination. The 2021 Legislature had a few successes but ultimately failed to enact policies that will bring long-term prosperity to New Mexico.

Despite a big budget surplus, the Legislature raised taxes on health insurance (SB 317). They imposed a new sick leave mandate on businesses, including small ones (HB 20). And, passage of HB 4, the misnamed “Civil Rights Act” will impose massive new legal costs on New Mexico governments without actually improving policing or protecting civil rights.

There were bright spots. HB 255 reformed New Mexico’s liquor licensing to make it easier for bars and restaurants long-term. HB 177 passed which allows New Mexicans to start micro-businesses by making non-perishable food items in their homes for sale.

But the gross receipts tax and its taxation of busines inputs and services remains a stumbling block for businesses. New Mexico also remains among a relatively small group of states that tax Social Security. No significant tax cuts or reforms were adopted. Also, no widespread reform of burdensome regulations (like the State’s “prevailing wage” law that artificially increases costs on public works) projects was enacted.

Some will argue that (after a decade of trying) tapping the Permanent fund to boost various education programs will help improve our workforce, but the track record of governments (including New Mexico’s) spending more money to boost education outcomes is spotty at best. Empowering parents and families with the resources needed to choose the educational option that is right for them (especially after a year of Zoom education), is more likely to succeed and at a fraction of the cost, but legislation to that effect was quickly defeated this session.

Microchip manufacturer Intel just announced that it is investing $20 billion in neighboring Arizona to build two new facilities. Such “economic diversification” is exactly what we need and what the Gov. and Legislature claim to want. Until the Legislature gets serious about reforming our economy we’ll continue riding the wave of luck, boom and bust in the oil patch, and Washington debt.

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Video of discussion: Kevin Hassett and Paul Gessing Evaluate the Impact of President Biden’s Energy Policy

Post author By Paul Gessing
Post date February 25, 2021

On Wednesday Feb. 24, the Paul Gessing of the Rio Grande Foundation and Kevin Hassett of the National Review Institute discussed the impact of the Biden Administration’s energy policies on New Mexico. You can watch the discussion which lasts about an hour below: